In general, meals which are “prepared away from home” are provided by the food service industry. The food service industry involves a number of different entities or participants, including manufacturers, distributors, and operators. Manufacturers—such as, for example, dairies, bakeries, and farms—produce the products from which meals are prepared. Distributors act as “middle men” to consolidate the products from a number of manufacturers and deliver the same to operators. Operators—which include restaurants, hotels, school cafeterias, airlines, etc.—use the products to actually prepare and/or serve meals to consumers. Operators may have multiple locations or “units” at which services are rendered or provided (i.e., where meals are prepared and/or made available to the consumers).
Although the food service industry represents a significant share of all retail food sales, it is rife with inefficiencies. The greatest challenge the food service industry faces today is streamlining all areas of the supply chain to improve the profitability of all the participants (e.g., operators, distributors, and manufacturers). For example, for multi-unit food service operators, food is the most important raw material for business, and thus, its purchase is a mission-critical, strategic operation. In the low-margin food service industry, reducing food costs by one percent can yield a twenty percent or more increase in revenue. Operators may thus seek volume discounts for products of a particular manufacturer or distributor. Furthermore, operators may establish “preferred” suppliers (manufacturers or distributors) from which products should be ordered. Distributors and manufacturers, too, can leverage efficient purchasing initiatives to drive down their costs and compete more effectively.
In order to implement more effective and efficient purchasing strategies, participants require particular information. To date, this type of information—commonly available in retail/consumer segments (e.g., grocery industry)—has been absent from the food service industry. Specifically, a major technical impediment to seamless transaction and information flow between trading partners in the food service industry has been a lack of standards for identifying products. In the grocery industry, which is generally responsible for food “prepared at home,” almost any given item is identifiable by respective standard universal product code (UPC) that is understood and accepted at any point in the supply chain, including any checkout scanner. In the food service industry, however, the same item may be described in a number of different ways by various distributors who supply the item to operators. For each distributor, the same item may carry a different product description, manufacturer identifier, product number, pack, and size description.
Without unified, multi-distributor purchase management reporting and analysis, food service operators cannot proactively manage purchasing activities or move forward with initiatives (e.g., volume discounts or rebates) that positively impact company profitability. For food service operators, purchasing is the daily mission-critical job that can mean the difference between profit and loss, especially for multi-unit operators which must coordinate purchases from multiple locations with multiple vendors. Corporate purchasing standards need to be controlled across all units to ensure consistent food quality and to obtain the maximum in volume buying power. But the lack of consistency in product information makes it difficult to bring new efficiencies and control to the purchasing process. For example, off-contract purchases undermine the buying efforts but are difficult to detect or prevent.
This lack of consistency in product information also presents a major barrier to food service manufacturers. Without a single, consistent standard identifier for its products throughout the food service channels, manufacturers are stymied in their efforts to track purchasing patterns, market share statistics, promotional activities, and more. Instead of a single identifier, there are a myriad of identifiers for identical products, making data aggregation a time-consuming, error-prone nightmare for business analysts. Without the basic data foundation, manufacturers have had to rely on educated guesses and hunches about what the best markets are for their products and how their products compare against the competition.